Regulation and the Informal Economy: Microenterprises in Chile, Ecuador, and Jamaica

The extent to which the regulatory environment in developing countries influences the characteristics and growth potential of the urban informal sector is an issue much debated today, in large part because of its strong association with policy measures. Of particular concern is the effect of regulations on microenterprises, in terms of both "start up" and the capacity for expansion. This book demonstrates that regulations are not in fact perceived by entrepreneurs as a constraint to initiating microenterprises; nor does compliance seem to present significant operational problems.

The authors draw on surveys and in-depth interviews within the informal sectors of Chile, Ecuador, and Jamaica—countries with differing regulatory frameworks and a diverse degree of law enforcement. They find that compliance with legal requirements increases when an enterprise requires visibility in order to grow; when there is a strong enforcement capacity; and when the benefits derived from registration outweigh the costs, particularly when compliance allows easier access to productive factors.

• A COMPARATIVE VIEW OF REGULATIONS AND INFORMALITY—E. Klein and V.E. Tokman.
• Introduction.
• The Survey Methodology.
• Characteristics of the Firms.
• The Legal Framework for Small Businesses in Chile, Ecuador, and Jamaica.
• Compliance with Regulations. Regulations: Causes and Effects.
• MICROENTERPRISES AND THE INFORMAL SECTOR IN THE SANTIAGO METROPOLITAN AREA—G. Wormald and J. Rozas.
• Introduction. Profile of the Microenterprises.
• Compliance with Regulations.
• Causes and Effects of Regulatory Compliance.
• Conclusions.
• THE OPERATION OF SMALL ENTERPRISES AND THE INSTITUTIONAL FRAMEWORK IN ECUADOR—R. Roggiero, G. Rodríguez, C. de Miras, P. Andrade.
• Introduction.
• The Legal Framework for the Operation of Small Enterprises.
• The Labor Market.
• The Market for Goods and Services.
• Operating Features of the Microenterprises.
• Regulations.
• Support for the Microenterprises: Guild Associations and Bookkeeping.
• Conclusions.
• OUT OF THE SHADOWS: INSTITUTIONAL FRAMEWORK AND SMALL-SCALE MANUFACTURING ENTERPRISES IN JAMAICA—P. Anderson.
• Introduction.
• The Legal and Regulatory Framework for Small Businesses.
• Operating Features of Small Manufacturing Enterprises.
• Formalization and the Observance of Regulations.
• The Outlook for the Small-Scale Manufacturing Sector.
• Bibliography.